Delhi High Court - Orders
Rms Automation Systems Limited vs Tata Power Delhi Distribution Limited on 11 October, 2021
Author: Vibhu Bakhru
Bench: Vibhu Bakhru
$~17
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 1015/2021
RMS AUTOMATION SYSTEMS LIMITED ..... Petitioner
Through: Mr Jayant Mehta, Senior Advocate
along with Ms Kanika Sinha and Ms
Akshita Agarwal, Advocates.
versus
TATA POWER DELHI DISTRIBUTION
LIMITED ..... Respondent
Through: Mr Anand Kumar Shrivastava and Ms
Priyansha Indra Sharma, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 11.10.2021
[Hearing Held Through Videoconferencing]
I.A. 13334/2021 & 13335/2021
1. Exemptions are allowed, subject to all just exceptions.
2. The applications are disposed of.
ARB.P. 1015/20213. The petitioner has filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter the 'A&C Act') praying that an Arbitrator be appointed in terms of Clause 14 of the Lease Agreement to adjudicate the disputes that have arisen between the parties.
4. In the year 1999, the erstwhile Delhi Vidyut Board (hereafter 'DVB') had invited tenders for the supply and installation of LT Load Management System consisting of LT switched capacitor banks and associated Signature Not Verified Digitally Signed By:DUSHYANT RAWAL accessories, on lease basis for a period of ten years.
5. The petitioner had participated in the said tender process and was awarded the contract. The petitioner, thereafter, entered into an 'Agreement of a Lease' with DVB on 25.05.2000 (hereafter the 'Agreement'). The petitioner claims that in terms of the Agreement, it supplied and installed the LT Load Management System and raised monthly running invoices.
6. The petitioner states that there were certain issues regarding Form C to be issued by the respondent, which is one of the entities entrusted with distribution of electricity in Delhi, on unbundling of the erstwhile DVB.
7. The petitioner claims that disputes arose as the respondent failed to discharge its liability in respect of invoices raised by the petitioner for the period January, 2011 to December, 2011. The petitioner states that it had raised an invoice in respect of the aforesaid period for an amount of ₹97,07,081/- and the respondent had made part payment of ₹28,79,256/-. The petitioner claims that the respondent had assured the petitioner that the pending amount of ₹68,27,825/- shall be paid once the issue regarding Form-C is resolved, which at the material time was pending adjudication before this Court. The petitioner claims that even though Form-C was issued to the respondent in the year 2016 pursuant to an order dated 11.03.2016 passed by this Court, the respondent failed to pay the outstanding amount under the aforesaid invoices.
8. In view of the disputes, the petitioner issued a notice dated 23.07.2018 invoking the agreement to refer the disputes to arbitration. Clause 14 of the Agreement is relevant and reads as under:
"14 Default/Disputes :Signature Not Verified Digitally Signed By:DUSHYANT RAWAL
14.1 In case of any default by either/or DVB and RMS resulting in disputes, then both parties shall strive to settle such disputes through mutual discussions. If such defaults/disputes cannot be corrected/settled by mutual discussions, then the matter shall be referred to arbitration as said hereunder in clause No. 14.2 Any disputes or differences in respect of the construction, meaning or effect or the enforceability, validity or existence of this Agreement or the rights and liabilities of the parties hereunder of any matter arising out of or in connection with this agreement shall be resolved through the Arbitration. A sole Arbitrator shall be appointed jointly by both parties and failing agreement between parties within a period of 30 days of one party serving notice thereof on the other party, President Insitution of Engineers shall be requested to nominate an Arbitrator. The arbitration shall be conducted in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory amendments thereof. The venue of such arbitration shall be New Delhi."
9. By its letter dated 23.07.2018, the petitioner also suggested that Sh. Sidharth Yadav, Advocate be appointed as the Sole Arbitrator.
10. The respondent responded by its letter dated 19.11.2018 and rejected the claims raised by the petitioner. It also refused to accept the arbitrator as suggested by the petitioner. The respondent referred to Clause 14 of the Agreement and marked the letters to the Institution of Engineers (IOE) for appointment of the Sole Arbitrator. On 09.07.2020, the IOE appointed Sh. RR Garg as the Sole Arbitrator to adjudicate the disputes and the learned arbitrator entered the reference on 20.07.2020.
11. The petitioner filed its Statement of Claims on 07.08.2020, however, the respondent declined to participate in the arbitration proceedings. It stated Signature Not Verified Digitally Signed By:DUSHYANT RAWAL that the procedure prescribed under the arbitration agreement was not followed as the parties had not exhausted the avenues for resolving the disputes amicably. Consequently, On 09.08.2020, the learned arbitrator appointed by the IOE withdrew himself from the arbitration proceedings.
12. Thereafter, the parties entered into negotiations to settle the disputes amicably, however, the parties failed to reach any consensus. Accordingly, the petitioner, once again, approached the IOE to appoint an arbitrator and on 02.02.2021, the IOE re-appointed Sh. RR Garg as the Sole Arbitrator.
13. By a letter dated 08.02.2021, the respondent rejected the appointment of Sh. RR Garg as the Sole Arbitrator on the grounds that the said arbitrator was appointed unilaterally and pre-conditions for appointment of an arbitrator under Clause 14 of the Agreement were not complied with. The petitioner disputed that the appointment of the learned arbitrator was not in compliance with the agreement to refer the disputes to arbitration and by its letter dated 24.02.2021, requested IOE to not revoke the appointment of the learned arbitrator.
14. On 05.04.2021, IOE informed both the parties that since the appointment of Sh. RR Garg was not acceptable to the respondent, it shall appoint an arbitrator only when it receives a joint request from both parties. While the petitioner on 08.04.2021 gave its consent for appointment of the arbitrator, already appointed by IOE; the respondent by its letter dated 14.04.2021 disputed the appointment of the arbitrator for non-compliance of Clause 14 of the Agreement and also because, IOE had become functus officio, and thus, did not have the authority to appoint the learned arbitrator.
15. Mr Srivastava, learned counsel appearing for the respondent does not dispute the existence of the agreement to refer the disputes to arbitration. He Signature Not Verified Digitally Signed By:DUSHYANT RAWAL has opposed the present petition on the sole ground that the claims raised by the petitioner are barred by limitation. He states that the claim of the petitioner is in respect of outstanding payment arising out of invoices raised for the period January, 2011 to December, 2011, however, the petitioner had invoked the Arbitration Agreement on 23.07.2018.
16. Mr Mehta, learned senior counsel appearing for the petitioner, has countered the aforesaid submissions. He submits that even though the payment due from the respondent is in respect of invoices raised in the year 2011, however, payments were deferred until 2016 as the controversy regarding the issuance of Form-C by the respondent was pending before this Court. He further submits that the respondent has not disputed the contractual relationship and acknowledged its liability under the aforesaid invoices. The only issue that remains is regarding the quantum of the liability, which was stated to be contingent on the determination of the matter, then pending before this court.
17. This Court is unable to accept that the claims made by the petitioner are ex facie barred by limitation. It is clearly a contentious issue and given the standards of examination under Section 11 of the A&C Act it is not necessary for this Court to address the said issue in this proceeding. The question whether the disputes are within the period of limitation falls within the jurisdiction of the Arbitral Tribunal and unless it is, ex facie, apparent that the disputes are barred by limitation, the parties are required to be referred to arbitration (See - Vidya Drolia & Ors. v. Durga Trading Corporation: (2021) 2 SCC 1).
18. At this stage, the learned counsel for the respondent requests that an arbitrator be appointed and all contentions be left open.
Signature Not Verified Digitally Signed By:DUSHYANT RAWAL19. Considering that there is no dispute as to the existence of the Arbitration Agreement and the petitioner has invoked the same, this Court considers it apposite to allow the present petition. However, it is clarified that this will not preclude the parties from canvassing such contentions as advised before the Arbitral Tribunal.
20. Mr. O.P. Gupta, a former District and Sessions Judge (Mob:
9910384645) is proposed to be appointed as the Sole Arbitrator to adjudicate the disputes between the parties.
21. The parties are at liberty to approach the Arbitrator for eliciting his consent and the necessary disclosure as required under Section 12(1) of the A&C Act.
22. Let the same be furnished to this Court before the next date of hearing.
23. List on 25.10.2021.
VIBHU BAKHRU, J OCTOBER 11, 2021 RK Click here to check corrigendum, if any Signature Not Verified Digitally Signed By:DUSHYANT RAWAL